Which of the Following Is True of the Cournot Duopoly

question 58

Multiple Choice

Which of the following is true of the Cournot duopoly model?

• A)It shows how the interaction of uncoordinated output decisions of rival firms leads to equilibrium in the oligopoly market.
• B)It explains how prices are determined in a market that has a large number of firms and a homogeneous product.
• C)It shows how equilibrium is attained in a market where two firms collude to set output and price equal to the monopoly output and price.
• D)It explains how prices are determined in a market with a single dominant firm and a large number of competitive fringe firms.

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Definitions:

Indifference Curve

A graph representing combinations of two goods that provide the consumer with the same level of satisfaction, illustrating preferences.

Constant

A value that does not change in mathematical expressions or economic models, acting as a fixed point of reference.

Diminishing

A principle indicating that as more of a good or service is consumed, the marginal benefit to the consumer decreases.

Behavioral Economics

A field of economic research that examines the effects of psychological, cognitive, emotional, cultural, and social factors on economic decisions.